Bitcoin briefly jumped above $64,400 following the Federal Reserve’s decision to keep interest rates steady at 3.50%-3.75%, but the gain evaporated when Chair Kevin Warsh declared there is "no soft inflation target." The statement sent shockwaves through crypto markets, pushing BTC below $64,000 within the hour, despite a modest 1% rise over the past 24 hours, according to CoinGecko.

The Fed’s rate hold was largely anticipated, yet the hawkish tone from Warsh overshadowed the decision. Three Federal Open Market Committee members dissented, advocating for a 25 basis point hike the first time in years the committee was split going into a meeting. Futures markets had priced in only a 35% chance of a rate increase, highlighting uncertainty among investors.

Warsh’s Hardline on Inflation and Market Ripples

Warsh, who replaced Jerome Powell earlier this year after being nominated by former President Trump, emphasized that inflation remains unacceptably high, partly due to supply shocks in sectors like energy. His blunt remarks contrast with the Fed's usual cautious language and reflect his "no tolerance" approach to elevated inflation, which he articulated to Congress recently. This stance clouds the outlook for upcoming policy moves, especially ahead of the September 15-16 meeting.

Outside the Fed, geopolitical tensions added pressure. Oil prices surged after Trump vowed a strong U.S. response to attacks on American personnel in the Middle East. The 10-year Treasury yield climbed to 4.62%, nearing this year’s peak, while the Dow Jones Industrial Average dropped nearly 400 points before recovering some losses. These factors contributed to a jittery mood, limiting upside for risk assets such as cryptocurrencies.

Ethereum hovered near $1,900 and XRP stayed close to $1.06, both largely unchanged. The total crypto market cap edged up 2.2% to about $2.29 trillion, while the Crypto Fear & Greed Index remained low at 35, signaling persistent market anxiety. Gold prices rose 1.2% amid the risk-off sentiment.

This episode highlights how crypto traders are now closely tracking Fed rhetoric, not just rate decisions. For more on recent Fed moves, see Fed Chair Kevin Warsh Discusses Steady Interest Rates Amid Inflation Challenges.

This material is for informational purposes only and does not constitute financial advice.